aim: ser - sefton resources · 2011-05-27 · directors jim ellerton-chairman and ceo, sefton mr....
TRANSCRIPT
May 2011
Jim Ellerton, CEO
AIM: SER
Directors
Jim Ellerton - Chairman and CEO, SeftonMr. Ellerton has over 30 years of multi-discipline experience in the development andevaluation of oil and gas prospects throughout the major basins of North America. Hehas major oil company background (Texaco) and independent company start-up andmanagement experience, and is one of the original founders of Sefton Resources.
Karl F. Arleth – Non-executive Director, SeftonMr. Arleth is currently Managing Partner of Blue River Resources LLC, a Denver-based private oil and gas start-up firm engaged in the acquisition and development of U.S. producing properties. He has over 30-years of domestic and international oil and gas experience, including 22 years at Amoco and BP.
Mark R. Smith – Non-executive Director, SeftonMr. Smith currently is sole practitioner of law at Mark R. Smith PC in Calgary, Alberta Canada and has been involved in the energy industry for over 20 years. He has in-depth knowledge of securities law, mergers and acquisitions and oil and gas transactional law and serves on a number of boards and subcommittees of both private and public entities.
* We will be adding additional non-executive Directors and splitting the role of Chairman/CEO
2
Company Overview
London Stock Exchange AIM Code: SER.L
Shares Outstanding: 280 MM (3/28/11)
Management Ownership: 13.0%
YTD H/L: 9.75p / 1.6p
~Market Cap. / ~EV*: £14.0 MM / £18.0 MM
YTD Average Daily Volume*: 12,000,000 shares
6-Month 2010 Net Production: 28,000 BOE
(153 BOPD)
(100% Oil)
Producing Well Bores: 27
Proved Reserves (12/31/10): 3.8 MMBOE
(100% oil / 42% PD)
$80.6 MM PV-10 @
$71.38 Bbl
Acreage Gross / Net: 51,772 / 51,772
Core Areas: California / Kansas
Fiscal Year End: December 31
Natural Gas
Heavy / Medium
Crude Oil
Ventura Basin
100% WI / 90% NRI
Forest City
Basin
100% WI /
87.5% NRI
Denver HQ
CA
CO
KS
3
* EV = Enterprise Value (Debt + Equity)
Our Strategy
• We acquire long lived, partially developed reserves with controlling interest, that
are shallow and have access to markets and infrasructure, in areas that are
politically stable and yield a minimum internal rate of return (IIR) in excess of
30%
• Selectively acquire core asset positions at bottom to mid commodity price cycle
• Develop core assets with company funding, retaining operatorship and a high
WI%
• At appropriate stage of development and asset maturity, leverage remaining
growth potential with third-party capital through drilling funds, JVs, farmouts and
strategic alliances
• Accelerate growth via material acquisitions
• Maximize long-term shareholder return through selective strategic asset sales at
the top of the commodity cycle or through a merger
4
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
2004 2005 2006 2007 2008 2009 2010
Capital Expenditures
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
2004 2005 2006 2007 2008 2009 2010
Oil and Gas Sales
-$1.0
$0.0
$1.0
$2.0
$3.0
2004 2005 2006 2007 2008 2009 2010
Cash Flow From Operations
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
2004 2005 2006 2007 2008 2009 2010
Lifting Costs
6 Year Financial Summaries
(from Audited Financials)
($M) ($M)
($/Bbl)($M)
5
6
Share Price Performance 2011
(Sefton) (AIM Oil & Gas Index)
Ventura Basin California
Steam flood exploitation project (Yule Zone)
Sefton controls 262 gross and net acres
100% WI and 90% NRI (CWC ~$600,000)
27 wells on production making 130 BOE/d
Cyclic steaming 2010, continuous 2011
7 remaining infill locations
OOIP 11 MMBO
Targeted bolt-on acquisition potential
2.5-acre spacing with 1-acre down-spacing
potential
1 mileN
Tapia Field
Development exploitation project (marine/miocene
Sandstones)
Sefton controls 1,510 gross and net acres
100% WI and 83.3% NRI
6 wells on production making 8-15 BOE/d
2 remaining infill locations
At least one wildcat well, from geology/geochem data
27° API sweet crude
Targeted bolt-on acquisition and deeper pool potential
Eureka Canyon Field
7
-----JV & Acquisition
Targets
Tapia Steam
Flood Analog
Tapia Oil Field
Rugged canyon drilling targeting Yule Oil at depths of 1,100’
Estimated OOIP 11 MMBO with 50% current estimated recovery; ultimately 65% -
70% via full steaming program
Minimum surface disturbance and multiple-well pads
Received state award for clean up of acquired assets and ongoing care and
maintenance of new and existing wells and surface facilities
Prices normally received are Midway Sunset (8% deduct to NYMEX light sweet)
17° - 19° API Gravity Crude
Hartje # 18 Well- Tapia
8
Tapia Field Economics
9
Working Interest: 100%
Net Revenue Interest : 90%
Completed Well Cost: $590,000 to tanks
Well-head Oil Price: $95.00 Bbl @ wellhead
API°: 17-19
Operating Costs: $15.00 Bbl
Production Taxes: 6% - $5.50 Bbl
Trucking: $2.44 Bbl – offset by quality
adj.
Royalty: $9.50 Bbl
G&A $25 (@150 Bopd)
Total Deducts $55
Net Back: $40.00 Bbl
Gross Reserves/well 140 MBO (assuming 50% rec.)
Net Reserves/well 136 MBO
Bbls
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
Primary Recovery
Cyclic Steaming
Steam Flood
Total EUR High Case EUR*
21.7%
of OOIP
13.3%15.0%
50.0%
Up
to
70%
* High case dependent upon steam response
Per-well EURsType Well Assumptions
Oil Production BOPD
10
Acquired Tapia
Workovers &
Water Disposal
Sefton IPO Blowout
Production Forecast
11
Production ForecastInitial Tapia Development
Continuous Steam Forecast
Current Production
Tapia Acquired
Forest City Basin Kansas
Los Angeles County
CBM and conventional oil and gas potential
Shallow horizons
Sefton controls 43,000 gross and net acres
100% WI and 87.5% NRI
Net coal thickness exceeds basin average
Midstream infrastructure: SER controls 22
miles of pipeline and 10MMCFD gas plant
Anderson and Franklin Counties
Los Angeles County
CBM and conventional oil and gas potential
Shallow horizons shut-in due to lack of
infrastructure
Sefton controls 7,000 gross and net acres
100% WI and 87.5% NRI
Targeted acquisition potential
Midstream infrastructure: SER controls 50
miles of pipeline (Vanguard, LAGGS)
Leavenworth County
12
Assets
TEG MidContinent acquired a 22 mile pipeline
and a gas gathering/water disposal system,
including 17 inactive wells and 2 salt water
disposal wells in 2009
In addition, the acquisition provides sales
outlet, a 10 MMcf /d processing facility and a
“tap” into Quest’s pipeline which provides
TEG MidContinent with access to major gas
markets
PetroWaverly (Anderson Co., KS)
Midstream infrastructure: SER controls
approximately 50 miles of inactive pipelines
Access to major gas markets
Gathering and transportation for 3rd party
gas, Sefton equity gas
Opportunity for exploration joint ventures
Vanguard / LAGGS/Cholla (Leavenworth Co., KS)
13
Anderson/Franklin Counties
Major Pipelines
Acquired Pipeline &
Facilities
Major Oil Fields
Primary
objective: CBM
Secondary
objective:
shallow
underlying oil
fields
Access to major
pipelines
Have initiated
pilot CBM
drilling program
“Opportunistic acquisitions in a low price environment position Sefton for growth as
gas prices increase”
14
Leavenworth Upstream
15
Primary objective:
conventional gas and
midstream
infrastructure
Secondary objective:
CBM
Control of gas
gathering and access
to major pipelines
Have initiated
aggregation of area
infrastructure by
acquiring two pipelines
Leavenworth Midstream
26 miles of pipeline
Access to interstate
pipelines/potential gas
storage
Third-party gas can be
transported
Vanguard Pipeline
16
Gas Storage
FacilityMajor Interstate
Pipeline
LAGGS Pipeline
• 20 miles of pipeline
• Access to interstate pipeline
• Adjacent wells being acquired
• Potential for Sefton Equity gas
and third party gas transport
LAGGS
Cholla
Assets
Group Financial Overview
17
2010 2009 2008 2007
Oil and gas sales (net of royalties) $3,622,049 $2,739,282 $4,688,183 $2,977,691
Interest and other income $3,726 -- $390,000 $417
Operating expense ($795,950) ($617,042) ($1,040,573) ($672,845)
Net from oil & gas $2,829,825 $2,122,240 $4,037,610 $2,305,263
General and administrative ($1,444,048) ($1,409,056) ($1,774,819) ($1,519,848)
Interest expense ($291,902) ($277,181) ($192,264) ($78,578)
Subtotal ($1,735,950) ($1,686,237) ($1,967,083) ($1,598,426)
Net Cash $1,093,875 $436,003 $2,070,527 $706,837
DD&A ($437,079) ($426,898) ($462,685) ($304,965)
Share-based compensation ($116,313) ($196,223) ($162,528) ($197,220)
Retirement liability ($137,266) ($108,178) ($1,112,109) --
Subtotal ($690,658) ($731,299) ($1,737,322) ($502,185)
Net Income $403,217 ($295,296) $333,205 $204,652
2010 Reserves
18
PDP
PDNP
PUD
Poss. (Kansas)
383
2009 Proved Reserves (MBO)
PDP
PDNP
PUD
2010 Proved/Possible Reserves (MBO)
3,400
3,500
3,600
3,700
3,800
3,900
To
tal P
rov
ed
(M
BO
)
2009
2010
2009 v. 2010 Total Proved Reserves
Sefton Resources, Inc.
California Assets Proved Reserves
Year-end 2010 GAAP Constant Price Case (Average Price Case)
Discounted at
10% per year
Reserve Category Oil (MBO) Gas (MMCF) ($000s)
Proved Developed Producing 461 0 $ 11,921
Proved Developed Non-Producing 1,146 0 $ 25,590
Proved Undeveloped 2,195 0 $ 43,085
Total Proved 3,802 0 $ 80,596
Price deck: $71.40 Avg. price, Tapia and Eureka Fields
Sefton Resources, Inc.
California Assets Proved Reserves
Year-end 2010 (Future Strip Pricing)
Discounted at
10% per year
Reserve Category Oil (MBO) Gas (MMCF) ($000s)
Proved Developed Producing 482 0 $ 15,942
Proved Developed Non-Producing 1,150 0 $ 35,038
Proved Undeveloped 2,194 0 $ 58,894
Total Proved 3,827 0 $ 109,874
Price deck: $88.05 Bbl (12 Month Future Strip)
461
2,195
1,146
2,138
768
634
19
Sefton Reserves & Resources Summary
(5/16/11)
Reserve Category Oil (MBO) Gas (BCF)Undiscounted
$(MM) PV10 $(MM)
Proved Developed Producing (PDP) 461 0 $19,486 $11,921
Proved Developed Non-Producing (PDNP) 1,146 0 $50,291 $25,590
Proved Undeveloped (PUD) 2,195 0 $107,671 $43,085
Total Proved (P1), YE 2010 3,802 0 $177,448 $80,596
Possible (YE 2010 Anderson/Franklin) 0 2.3 $11,687 $6,164
Possible (May 2011 (Leavenworth) 0 0.53 $2,200 $1,200
Total Possible (P3) 0 2.83 $13,887 $7,364
Resources Category
Contingent (May 2011) 1,748 15.7 $106,100 $68,900
Prospective (May 2011) 0 34.8 $112,100 $30,000
1,748 50.5 $218,200 $98,900
Grand Totals 5,550 53.33 $409,535 $186,860
2011-2012 Outlook
California
Corporate
Kansas
Grow cash flow through developing existing assets - 2011
Strengthen balance sheet - 2011
Utilize outside capital sources for core area growth and acquistions -2012
Tapia: Increase production through continuous cyclic steam program, drilling and design full steam flood -2011
Eureka: Identify farmout candidates for deeper pool test
Pursue regional JV opportunities - 2012
Leavenworth Project:
Consolidate regional pipeline assets -2011
Activate acquired pipelines - 2011
Aggregate Sefton and third-party production - 2011
Leverage additional upstream and midstream assets utilizing outside capital - 2012
Anderson County:
Evaluate CBM and conventional oil and gas exploitation - 2012
Evaluate midstream assets for gas-gathering opportunities - 2012
20
Summary
• Diversified asset base with current oil production / Contrarian
gas play mix
• Profitable with solid, cash flowing asset
• Strong banking relationship with leading O&G lender
• Motivated management team and directors aligned with
growth strategy
• Undervalued oil asset metrics, gas value upside
21
Contact
Corporate Headquarters
Jim Ellerton, CEO
Sefton Resources, Inc.
2050 South Oneida St.
Denver, Colorado USA 80224
Tel: +1-303-759-2700
Fax:+1-303-759-2701
www.seftonresources.com
Broker
Clive Mattock, Dowgate Capital Stockbrokers
Tel +44 (0)1293 517 744
Jon Levinson, Rivington Street Corporate Finance
Tel: +44 (0)20 7562 3357
Nomad
Nick Harriss, Religare Capital Markets
Tel: +44 (0) 20 7444-0800
Investor Relations
Dr Michael Green, Investor Relations Consultant
Tel: +44 (0) 7855 734970
Financial Public Relations
Alex Walters, Cadogan PR
Tel : +44 (0)20 7839 9260
22
Disclaimer
This presentation is for information only and does not constitute or form part of any offer or invitation to sell, issue, purchase or subscribe for (or any
solicitation of any offer to purchase or subscribe for) the securities described herein in any jurisdiction. No reliance may be placed for any purposes
whatsoever on the information contained herein or on its completeness. All investments are subject to risk. The value of the securities, if and when offered,
may go down as well as up. Past performance is no guarantee of future returns. No representation or warranty, express or implied, is given by the Company
or any of their subsidiaries or any of their respective advisers, officers, employees or agents, as to the accuracy, fairness or completeness of the information
or opinions contained in this document or expressed in the presentation and no liability is accepted for any such information or opinions (which should not be
relied upon) or for any loss howsoever arising, directly or indirectly, from any use of this document or its contents or information expressed in the
presentation. This presentation contains certain "forward-looking statements”, including without limitation, expectations, beliefs, plans and objectives
regarding the potential transactions and ventures discussed in this release. Among the important factors that could cause actual results to differ materially
from those indicated by such forward-looking statements are the risks inherent in minerals exploration, the need to obtain additional financing, the availability
of needed personnel and equipment for future exploration and development, fluctuations in the prices of commodities, and general economic conditions.
Appendices
23
Corporate Structure
24
Sefton Resources, Inc. (AIM: SER)
(British Virgin Islands)
CEO
VP Operations & Engineering Engineering Consultant
Reed W. Ferrill & Associates, Inc.
TEG Oil & Gas USA, Inc.
(Colorado)
Tapia
Canyon
Field
(Oil)
Eureka
Canyon
Field
(Oil)
California
TEG Mid-Continent, Inc.
(Colorado)
Anderson /
Franklin
Projects
(Gas)
Leavenworth
County
Project
(Gas)
E. Kansas
100%100%
CFO
(2011)
Timeline
History
2000-2008
Initial Public Offering December
2000 through Tapia acquisition
Complete initial technical
evaluations on Tapia
Establish current technical and
operating team
Began re-drilling Tapia Nov. 2002
Bank facility 2007
Acquired Eureka Field 2002
Completed 2 geochemical
exploratory surveys at Eureka
Initiate pilot steam project at Tapia –
March 2008
Recent Activity Going Forward
2011-2012
Continued Tapia and Eureka
development
Continuous steam stimulation of
Tapia wells
Drill additional wells at Tapia
Design full steam-flood program
Activate Vanguard, Cholla pipelines
Continued development of Forest
City acreage
Pursue focused, bolt-on acquisition
opportunities for growth
2009-2010
Continued exploitation of Tapia
leading to full development scenario
Commenced cyclic steaming and
continuous steam pilots
State Award for Excellence in
Lease Maintenance (09-10)
Acquired Forest City Basin
infrastructure assets
Continued geologic and
engineering evaluation of Forest City
Basin (Conventional and CBM)
Partially developed, high WI% and NRI% with long-lived, operated reserve base
Targeting established producing areas with access to markets and support services
Shallow drilling
Invest CAPEX in projects with 30% or greater Internal rate of return (IRR)
Application of modern technology: SAGD, horizontal drilling, completion design
Growth through core asset development and strategic acquisitions
25
Steam Flooding
Benefits
What is Steam Flooding
Dr. Farouq Ali - HOR Heavy Oil Recovery Technologies, Ltd.
A method of Enhanced Oil Recovery (EOR) where steam is injected into dedicated wells and heated oil is effectively moved to surrounding oil producers
Also called steam-drive
Heat from steam and pressure from injection dramatically increases oil mobility in the subsurface
Oil recovery is commonly double that of primary methods (pumping only) – but can be much greater
Recognized as a world-wide expert in thermal Enhance Oil Recovery methods
Has examined / designed oilfield steam applications for over 200 locations including many in California
Completed initial study for application of steam flood at Tapia Oilfield
Currently completing refined steam simulation modeling and steam flood design for Tapia
26
Timeline
Tapia Steam Flood Pilot (currently active) : March 2011 – March 2012
Geologic Modeling (Petrel Robertson, Calgary) : January 2011 – April 2011
Improved Geologic Model (based on additional drilling) : Q1 2012
Steam Flood Simulation Modeling: Initial study : November 2010 (completed)
Detail study : April 2011 - May 2011
Modified / improved study : Q1 2012
(based on steam pilot data and additional drilling results)
Oilfield Unitization, Permitting & Steam Plant Design: April 2011 – April 2012
Well Drilling (oil producers) : Q4 2011
Construction and Implementation (steamflood) : Q3 2012 - Q4 2012
Tapia Topography
27
Field Shots
28
Steaming Unit Specs
29
Water is sourced at the field
Meets strict LA AQMD emissions requirements
Custom unit built in 2007 by Clayton Industries
Rated at 14,290,000 BTU per hour
Self-contained PLC / safety controls
Equipped with a low NOx burner
Trailer mounted for multiple location use
Facilities for cyclic steaming and associated
production increases in place
Flexibility to choose steam-generation fuel source
based on price and availability for uninterrupted
steam flood activities
– Utility gas
– Propane
– Lease gas (Sefton production)
Production Operations
DOGGR Operator Award 2009 & 2010
Facilities for cyclic steaming and associated
production increases in place
Flexibility to choose steam-generation fuel source
based on price and availability for uninterrupted
steam flood activities
– Utility gas
– Propane
– Lease gas (Sefton production)
Upgraded Facilities
Multi-well Pad Drilling
Minimizes Surface Impact
Steam Unit
30
Tapia – Snow #3 Log
31
Yule Sand
Tapia Oil Field
1
The well is drilled
through the oil
zone & casing
pipe is cemented
in place.
2
The oil zone is
under-reamed to
12” to 14” to allow
for an effective
filter pack.
3
A stainless steel
wire-wrapped
screen is placed in
the oil productive
well bore.
4
Uniform gravel is
pumped into the
annular space
between the screen
and formation sand
5
The gravel and screen
allow the oil and gas to
produce into the well
while filtering out
formation fines.
Oil-saturated
sandstone
shale
Typical gravel-pack filter screen completion as used on new oil wells
Process reduces workovers, increases recovery/reserves and lowers costs
shale
32
Yule Sand Structure – Tapia
7 Infill Locations
33
1
2
3
4
5 6
7
Eureka Canyon Field
Development exploitation project (marine/miocene
Sandstones)
Sefton controls 1,510 gross and net acres
100% WI and 83.3% NRI
6 wells on production making 8-15 BOE/d
2 remaining infill locations
At least one wildcat well (Deeper Pool)
27° API sweet crude
Geochem data acquired
Targeted bolt-on acquisition potential
34
Eureka Canyon Field
AREA OF HISTORICAL OIL
PRODUCTION SHOWING
DEPLETION
AREAS OF STRONG
EXPLORATORY
POTENTIAL
PHASE 1 AREA NOT
ENHANCED BY
PHASE 2 SURVEY
0’ 2500’ 5000’ 7500’ 10000’
Phase 2 Infill Survey
35
Jim Ellerton, CEO
AIM: SER